The Bank of Spain has crafted a plan to strengthen how it supervises the conduct of financial entities, focusing on ensuring banks treat clients fairly. The board reviewed an external assessment commissioned late last year from a panel of three independent international experts. Building on that analysis and its recommendations, the institution has laid out an action program to be carried out in the near and mid term. The plan, whose contents are expected to be announced this week, includes organizational and governance initiatives as well as several proposals with regulatory implications.
The general philosophy is to move away from an ex post, corrective approach—checking compliance after the fact to sanction deviations—toward an ex ante, preventive model that aims to detect and head off problems before they become harmful practices that generate customer complaints. The governor, José Luis Escrivá, noted in Congress that a radical cultural shift is needed because supervision has historically focused on checkbox compliance and must become more forward‑looking, risk‑driven, and behavior‑oriented. There are many initiatives planned to reset how supervision is approached, according to his remarks in the chamber this week.
The Bank of Spain oversees the conduct of 1,067 entities, including banks, appraisal firms, consumer credit institutions, and payment intermediaries. For reference, in 2023 the authority conducted 153 conduct supervision actions, of which 23 were unplanned. As a result, it opened a sanction file, issued more than 100 requirements asking entities to address identified deficiencies or weaknesses, and prepared 76 letters of recommendations and clarifications on the treatment of specific products, operations, or actions.
Greater focus on prevention
The institution now intends to place greater emphasis on preventing cases with the potential to cause the most damage. This means identifying in advance the patterns or trends that carry higher risk in the relationship between entities and their customers, including more rigorous use of data through advanced technological innovations. The aim is to sharpen the ability to react early with supervisory and disciplinary measures when risks are detected, as explained by the governor in Madrid. This perspective aligns with a broader shift toward proactive risk management and strengthened early warning capabilities, as noted by the external evaluators who reviewed the supervision framework.
One notable change is that inspections will not only be conducted on a case‑by‑case basis but will also include horizontal, sector‑wide reviews. These broader inspections will not produce individual reports; instead they will help draft supervisory expectation documents to guide entities. The Bank of Spain also expects the Congress to approve, in coming months, a legal reform linked to the creation of the Authority for the Defense of the Financial Client. That reform would allow inspectors to visit bank offices without identifying themselves, similar to what is possible for the National Securities Market Commission in certain situations.
International evaluation
The external review that underpins the plan was carried out by Stefan Ingves, former governor of the Swedish central bank; Hanzo van Beusekom, counselor at the Dutch financial markets authority; and Pedro Duarte Neves, former deputy governor and senior advisor at the Bank of Portugal. The evaluation was integrated into the Bank of Spain’s 2024 Strategic Plan, which the council approved in early 2020, with one ambition focused on improving conduct supervision. In May 2022, a new Directorate‑General for Conduct and Banknotes was created under Alberto Ríos.
The evaluators conducted a critical examination of conduct supervision at the Bank of Spain, assessing the strategy and governance used to carry out the task, along with methodologies and processes. They reviewed how the institution identifies and grades the relevant market risks and how its alert system and early indicators operate; how risk profiles of conduct are built for each entity; how on‑site inspections are conducted; and how early‑care mechanisms function to correct improper conduct or breaches. These aspects formed the backbone of their assessment and informed the forthcoming plan and its proposals. The three experts also evaluated the information sources and technological tools available to the conduct supervisors, whether the responsible directorate has adequate resources and the right professional profiles, and the strategies for hiring and training teams. They considered whether the institution communicates its expectations clearly to entities and how effective supervisory measures prove to be in practice.
Sources from the external assessment and internal reviews emphasize a commitment to clearer expectations, stronger data governance, and more transparent, proactive oversight that aligns with international best practices. The Bank of Spain believes these changes will elevate the quality and consistency of conduct supervision across the financial sector, benefiting both customers and market integrity. The plan is framed to evolve as new insights emerge from ongoing evaluations and technological innovations, with continuous improvement at its core.